The Supreme Court of India has delivered a significant relief to industrial, mining and infrastructure companies by ruling that heavy machinery used exclusively within factories, mines and other closed industrial premises is not liable to pay road tax.
In a judgment delivered recently, the top court held that equipment such as dumpers, excavators, surface miners and similar specialised machines cannot be classified as “motor vehicles” subject to road tax when their primary purpose and design are confined to off-road use. The bench observed that such machinery is not meant for operation on public roads and therefore lies outside the scope of the Motor Vehicles Act and related state tax provisions.
The ruling overturned a 2011 Gujarat High Court decision that had allowed the imposition of motor vehicle tax on heavy construction and industrial equipment. The Supreme Court clarified that under Entry 57 of List II of the Seventh Schedule to the Constitution, the power of states to levy road tax is confined to vehicles genuinely intended for public road use.
However, the court stressed that this exemption applies only when the machinery is actually used within industrial sites. If such equipment is found to be operating on public roads, it would once again attract provisions of the Motor Vehicles Act and corresponding state tax liabilities, including road tax and penalties.
The judgment stemmed from an appeal by UltraTech Cement Ltd challenging the high court’s earlier order. Legal experts say the ruling provides clarity and significant financial relief to companies that rely on off-road machinery for operations in manufacturing, mining and large-scale project sites across India.